<PAGE>

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                            UNITED STATES     
                SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                        __________________

                            FORM 10-Q

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

              FOR THE QUARTERLY PERIOD ENDED JULY 31, 1997
OR

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

                 COMMISSION FILE NUMBER:   001-11807
                     ___________________________
 
                         UNIFY  CORPORATION
      (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                   94-2710559          
-------------------------------             -------------------------------
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION)                           NUMBER)

                    181 METRO DRIVE, THIRD FLOOR
                    SAN JOSE, CALIFORNIA  95110
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                           
                     TELEPHONE:  (408) 467-4500
       (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
                                           
Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  
                      YES  X    NO           
                          ---      ---

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

      8,250,241 shares of Common Stock, $0.001 par value, as of August 31, 1997

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                            UNIFY CORPORATION
                                FORM 10-Q
                                           
                                  INDEX

                                                                        PAGE
                                                                       NUMBER
                                                                       ------
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of
             July 31, 1997 and April 30, 1997. . . . . . . . . . . .       3

         Condensed Consolidated Statements of Operations for
             the three months ended July 31, 1997 and 1996 . . . . .       4

         Condensed Consolidated Statements of Cash Flows
             for the three months ended July 31, 1997 and 1996 . . .       5

         Notes to Condensed Consolidated Financial Statements. . . .       6

Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations . . . . .       7


PART II. OTHER INFORMATION

Item 5.  Other Information . . . . . . . . . . . . . . . . . . . . .      12

Item 6.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .      12


SIGNATURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      13


Exhibit 11.1 Statement of Computation of Net Income (Loss) Per Share      14


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


                             UNIFY CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEETS
                               (IN THOUSANDS)


                                                  July 31,         April 30,
                                                    1997             1997
                                                 -----------       ----------
ASSETS                                           (unaudited)          (1)
Current assets:
   Cash and cash equivalents                       $  5,343       $  9,513
   Short-term investments                             6,678          7,133
   Accounts receivable, net                           4,125          4,557
   Prepaid expenses and other current assets            449            526
                                                   --------       --------
      Total current assets                           16,595         21,729

Property and equipment, net                           2,364          2,415
Other assets                                            151            294
                                                   --------       --------
      Total assets                                 $ 19,110       $ 24,438
                                                   --------       --------
                                                   --------       --------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt               $    134       $  2,378
   Accounts payable                                   1,886          1,586
   Amounts due to minority interest stockholders        845            830
   Accrued compensation and related expenses          1,601          1,972
   Other accrued liabilities                          3,121          3,797
   Deferred revenue                                   3,037          3,531
                                                   --------       --------
      Total current liabilities                      10,624         14,094

Long-term debt, net of current portion                   42             58
Minority interest                                       261            324

Stockholders' equity:
   Common stock                                           8              8
   Additional paid-in capital                        53,292         52,965
   Notes receivable from stockholders                  (209)          (207)
   Cumulative translation adjustments                  (696)          (767)
   Accumulated deficit                              (44,212)       (42,037)
                                                   --------       --------
      Total stockholders' equity                      8,183          9,962
                                                   --------       --------
      Total liabilities and stockholders' equity   $ 19,110       $ 24,438
                                                   --------       --------
                                                   --------       --------


(1)  Derived from audited financial statements.


See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                               UNIFY CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
                                                                      
                                                                      
                                                                      
                                                     THREE MONTHS ENDED JULY 31,
                                                     ---------------------------
                                                          1997          1996
                                                     -------------   -----------
Revenues:
   Software licenses                                    $  2,869     $  3,979
   Services                                                2,265        2,249
   Amnesty license arrangement                                 -        2,812
                                                        --------     --------
      Total revenues                                       5,134        9,040
                                                        --------     --------

Cost of revenues:
   Software licenses                                         233          356
   Services                                                1,081        1,128
                                                        --------     --------
      Total cost of revenues                               1,314        1,484
                                                        --------     --------

Gross margin                                               3,820        7,556
                                                        --------     --------

Operating expenses:
   Product development                                     1,448        1,691
   Selling, general and administrative                     4,560        5,667
                                                        --------     --------
      Total operating expenses                             6,008        7,358
                                                        --------     --------

      Income (loss) from operations                       (2,188)         198
Other income, net                                             60           47
                                                        --------     --------
      Income (loss) before income taxes                   (2,128)         245
Provision for income taxes                                   (47)         (58)
                                                        --------     --------
      Net income (loss)                                 $ (2,175)    $    187
                                                        --------     --------
                                                        --------     --------


Net income (loss) per share                             $  (0.27)    $   0.03
                                                        --------     --------
                                                        --------     --------

Shares used in computing net income (loss) per share       8,180        7,450
                                                        --------     --------
                                                        --------     --------



See accompanying notes to condensed consolidated financial statements.
                                                                      
                                       4
<PAGE>

                               UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                      THREE MONTHS ENDED JULY 31,
                                                                      ---------------------------
                                                                          1997           1996
                                                                      ------------     ----------
<S>                                                                  <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                                  $  (2,175)       $   187
   Reconciliation of net income (loss) to net cash used
   in operating activities:
      Depreciation                                                          264            333
      Provision for losses on accounts receivable                            42              -
      Minority interest                                                     (63)          (113)
      Liquidation of Benelux subsidiary                                     136              -
      Imputed interest on stockholder line of credit                          -             73
      Changes in operating assets and liabilities:
         Accounts receivable                                                447         (2,981)
         Prepaid expenses and other current assets                           77             87
         Accounts payable                                                   275           (285)
         Amounts due to minority interest stockholders                      (29)           192
         Accrued compensation and related expenses                         (371)           424
         Other accrued liabilities                                         (675)           189
         Deferred revenue                                                  (502)          (414)
                                                                      ---------        -------
            Net cash used in operating activities                        (2,574)        (2,308)
                                                                      ---------        -------

Cash flows from investing activities:
   Purchases of available-for-sale securities                            (3,543)        (8,579)
   Sales of available-for-sale securities                                 3,998              -
   Purchases of property and equipment                                     (218)          (341)
   Other assets                                                             166             77
                                                                      ---------        -------
            Net cash provided by (used in) investing activities             403         (8,843)
                                                                      ---------        -------

Cash flows from financing activities:
   Principal payments under debt obligations                             (2,260)           (69)
   Proceeds from issuance of common stock, net                              327         23,253
   Collection of notes receivable from stockholders, net of
      interest accrual                                                       (2)            61
                                                                      ---------        -------
            Net cash (used in) provided by financing activities          (1,935)        23,245
                                                                      ---------        -------

Effect of exchange rate changes on cash                                     (64)             8
                                                                      ---------        -------
Net increase (decrease) in cash and cash equivalents                     (4,170)        12,102
Cash and cash equivalents, beginning of period                            9,513          3,028
                                                                      ---------        -------
Cash and cash equivalents, end of period                              $   5,343        $15,130
                                                                      ---------        -------
                                                                      ---------        -------

Supplemental schedule of noncash investing and financing activities:
   Conversion of redeemable preferred stock and accrued dividends
      to common stock                                                 $       -        $26,726
                                                                      ---------        -------
                                                                      ---------        -------
Cash paid during the period for:
   Interest                                                           $     250        $    97
                                                                      ---------        -------
                                                                      ---------        -------
   Income taxes                                                       $      31        $    63
                                                                      ---------        -------
                                                                      ---------        -------

</TABLE>
                                                                      
See accompanying notes to condensed consolidated financial statements.
                                       
                               
                                       5
<PAGE>

                               UNIFY CORPORATION
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION

    The condensed consolidated financial statements have been prepared by 
Unify Corporation (the "Company") pursuant to the rules and regulations of 
the Securities and Exchange Commission ("SEC").  While the interim financial 
information contained in this filing is unaudited, the financial statements 
presented reflect all adjustments (consisting only of normal recurring 
adjustments) which the Company considers necessary for a fair presentation of 
the financial position as of July 31, 1997 and April 30, 1997 and the results 
of operations and cash flows for the three months ended July 31, 1997 and 
1996. The results for interim periods are not necessarily indicative of the 
results to be expected for the entire fiscal year.  These financial 
statements should be read in conjunction with the Consolidated Financial 
Statements and Notes thereto, together with Management's Discussion and 
Analysis of Financial Condition and Results of Operations, which are included 
in the Company's Annual Report on Form 10-K for the year ended April 30, 1997 
as filed with the SEC.

2.  LONG-TERM DEBT

    At April 30, 1997, the Company had a line of credit provided by certain 
stockholders.  The Company retired the full $2.2 million balance due under 
this credit facility upon its expiration in July 1997.

3.  NEW ACCOUNTING PRONOUNCEMENTS

    In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS PER 
SHARE.  The Company is required to adopt SFAS No. 128 in the third quarter of 
fiscal 1998 and at that time will restate earnings per share data for prior 
periods to conform with the provisions of SFAS No. 128.  Earlier application 
is not permitted.  If SFAS No. 128 had been in effect for the quarter ended 
July 31, 1997, basic and diluted net loss per share would not have been 
significantly different than net loss per share currently reported for that 
period.  If SFAS No. 128 had been in effect for the quarter ended July 31, 
1996, basic net income per share would have been $0.04 per share and diluted 
net income per share would have been $0.03 per share.

    In June 1997, the Financial Accounting Standards Board issued two new 
SFASs.  SFAS No. 130, REPORTING COMPREHENSIVE INCOME, requires that an 
enterprise report, by major components and as a single total, the change in 
its net assets from nonowner sources during the period.  SFAS No. 131, 
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, 
establishes annual and interim reporting standards for an enterprise's 
business segments and related disclosures about its products, services, 
geographic areas and major customers. Adoption of these statements will not 
impact the Company's consolidated financial position, results of operations 
or cash flows.  Both statements are effective for fiscal years beginning 
after December 15, 1997, with earlier application permitted.

                                          6
<PAGE>

                                  UNIFY CORPORATION
                                           
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

    THE DISCUSSION IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS 
FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF 
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  SUCH FORWARD-LOOKING 
STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT 
THE SOFTWARE INDUSTRY AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S 
MANAGEMENT.  WORDS SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS", "PLANS", 
"BELIEVES", "SEEKS", "ESTIMATES", VARIATIONS OF SUCH WORDS AND SIMILAR 
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS.  THESE 
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO 
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT;  
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR 
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS.  SUCH RISKS AND 
UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET FORTH HEREIN UNDER 
"VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY 
RESULTS."  UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO 
UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW 
INFORMATION, FUTURE EVENTS OR OTHERWISE.  HOWEVER, READERS SHOULD CAREFULLY 
REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE COMPANY 
FILES FROM TIME TO TIME WITH THE SEC, PARTICULARLY THE COMPANY'S ANNUAL 
REPORTS ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q AND ANY CURRENT REPORTS 
ON FORM 8-K.

    The following discussion should be read in conjunction with the unaudited 
Condensed Consolidated Financial Statements and Notes thereto in Part I, Item 
1 of this Quarterly Report on Form 10-Q and with the audited Consolidated 
Financial Statements and Notes thereto, together with Management's Discussion 
and Analysis of Financial Condition and Results of Operations, which are 
included in the Company's Annual Report on Form 10-K for the year ended April 
30, 1997 as filed with the SEC.

RESULTS OF OPERATIONS

REVENUES

    The Company recognizes software license revenue when a noncancelable 
license agreement has been executed, the product has been shipped, all 
significant contractual obligations have been satisfied and collection of the 
resulting receivable is deemed probable by management.  Software licenses 
include both development and deployment licenses, with pricing for graphical 
products generally based upon the number of developers or end users, as 
applicable.  Customer maintenance revenues are recognized ratably over the 
maintenance period.  Payments for maintenance fees are generally received in 
advance and are nonrefundable.  Revenues from consulting and training 
services are recognized as the services are performed.

    The Company's strategy is to aggressively market and enhance its 
graphical products, Unify VISION and VISION/Web.  The Company continues to 
support its extensive installed base of Unify ACCELL and DataServer character 
products, which the Company believes represents a significant source of 
potential customers for Unify VISION and VISION/Web.  The Company also 
generates significant revenues from services, including customer maintenance, 
consulting and training. The following table sets forth revenues from 
licenses of its graphical and character products and from services for the 
periods indicated:

                                          7
<PAGE>

                                  UNIFY CORPORATION
                                           
                                           
                                           
                                              THREE MONTHS ENDED JULY 31,
                                              ---------------------------
                                                  1997           1996   
                                              -------------  ------------
    License revenues:
       Graphical                                 $ 1,257     $ 2,194
       Character                                   1,612       1,785
                                                 -------     -------
          Total license revenues                   2,869       3,979
    Services revenues                              2,265       2,249
    Amnesty license arrangement                        -       2,812
                                                 -------     -------
          Total revenues                         $ 5,134     $ 9,040
                                                 -------     -------
                                                 -------     -------


    Total revenues for the quarter ended July 31, 1997 decreased 43% over the 
same quarter of the prior year to $5.1 million.  Graphical license revenues 
of $1.3 million in the first quarter of fiscal 1998 were 43% lower than the 
same quarter of the prior year.  The decrease in graphical license revenues 
is primarily attributable to the lack of any single revenue item in excess of 
$1 million, the rebuilding of the North American sales team, and continuing 
longer sales cycles associated with the Company's solicitation of larger, 
enterprise-level sales transactions.  Character license revenues decreased 
10% over the same quarter of the prior year to $1.6 million, principally 
because of the general decline in demand for character products and the 
Company's continued focus on its graphical products.  Service revenues 
remained constant at approximately $2.3 million in the first quarters of 
fiscal 1998 and 1997.

    International revenues decreased to 50% of total revenues in the quarter 
ended July 31, 1997 from 75% of total revenues in the same quarter of the 
prior year primarily because of two international sales totaling $3.9 million 
which occurred in the first quarter of fiscal 1997.  The $2.8 million amnesty 
license arrangement for the use of unauthorized copies of the Company's 
character products was subsequently reversed in the third quarter of fiscal 
1997 when the Company determined that it would be unable to collect payments 
due pursuant to this arrangement.

    The Company made significant changes in the management and structure of 
its sales and marketing organizations and released Unify VISION 3.0 and 
VISION/Web during the second half of fiscal 1997.  As a result, the Company 
began to experience new opportunities to compete for larger, enterprise-level 
sales transactions which were accompanied by significantly longer sales 
cycles.  The Company expects that it will continue to experience extended 
customer evaluation and decision-making processes for large, complex Unify 
VISION and VISION/Web sales transactions over the next several quarters.  The 
Company also expects that in the near term it is likely that a significant 
portion of Unify VISION and VISION/Web sales to new customers may be for 
pilot programs and therefore modest in size.
                                           
COST OF REVENUES
                                           
    Cost of software licenses for the quarter ended July 31, 1997 decreased 
to $233,000, or 8% of license revenues, as compared to $356,000, or 9% of 
license revenues, for the same quarter of the prior year.  The decreases in 
cost of software licenses in absolute dollars and as a percent of license 
revenues were due to efficiencies achieved in the U.S. and Japan.
                                           
                                          8
<PAGE>

                                  UNIFY CORPORATION
                                           


    Cost of services were comparable at $1.1 million, or 48% and 50% of 
service revenues in the first quarters of fiscal 1998 and 1997, respectively. 
Within total services, the levels of customer maintenance and consulting and 
training revenues and expenses were also stable in the first quarter of 
fiscal 1998 as compared with the same quarter of the prior year.  As the 
Company increases its emphasis on providing comprehensive application 
development solutions in fiscal 1998 it expects that consulting service costs 
will increase, possibly significantly and at a faster rate than consulting 
revenues increase.

PRODUCT DEVELOPMENT

    Product development expenses for the quarter ended July 31, 1997 
decreased to $1.4 million, or 28% of total revenues, as compared to $1.7 
million, or 19% of total revenues, for the same quarter of the prior year.  
The decrease in product development expenses in absolute dollars was 
attributable to a decrease in contract staffing in the fiscal 1998 quarter 
from the level of staffing required in the first quarter of fiscal 1997 to 
complete Unify VISION 3.0 and VISION/Web in a timely manner.  The increase in 
product development expenses as a percentage of total revenues was because of 
the decline in first quarter 1998 license revenues as compared to the same 
period of the prior year.  The  Company believes  that substantial investment 
in product development is critical to maintaining technological leadership 
and therefore intends to continue to devote significant resources to product 
development.

SELLING, GENERAL AND ADMINISTRATIVE

    Selling, general and administrative ("SG&A") expenses for the quarter 
ended July 31, 1997 decreased to $4.6 million, or 89% of total revenues, as 
compared to $5.7 million, or 63% of total revenues, for the same quarter of 
the prior year.  SG&A expenses decreased in absolute dollars compared to the 
same period of the prior year as the Company continued to manage expenses and 
rebuild the North American sales team.  The increase in SG&A expenses as a 
percentage of total revenues was attributable to the decline in first quarter 
1998 license revenues as compared to the same period of the prior year. The 
Company expects that the cost savings experienced in SG&A expenses during the 
first quarter of fiscal 1998 as a result of the fiscal 1997 reorganization of 
its operations will abate as additional sales staff were hired or redeployed 
into the new sales organization by the end of the first quarter of fiscal 
1998.  The Company also expects that total SG&A expenses will fluctuate from 
quarter to quarter primarily because of variability in marketing program 
spending and sales commission expense.

PROVISION FOR INCOME TAXES

    The Company recorded tax provisions for the quarters ended July 31, 1997 
and 1996 which related primarily to foreign income tax withholding on 
software license royalties paid to the Company by certain foreign licensees.  
For the same periods, the Company recorded no federal or state income tax 
provisions as the Company had substantial net operating loss carryforwards.

                                          9
<PAGE>

                                  UNIFY CORPORATION
                                           

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

    The Company's common stock price has been and is likely to continue to be 
subject to significant volatility.  A variety of factors could cause the 
price of the Company's common stock to fluctuate, perhaps substantially, 
including: announcements of developments related to the Company's business; 
fluctuations in the Company's quarterly operating results and order levels; 
general conditions in the computer industry or the worldwide economy; 
announcements of technological innovations; new products or product 
enhancements by the Company or its competitors; changes in financial 
estimates by securities analysts; developments in patent, copyright or other 
intellectual property rights; and developments in the Company's relationships 
with its customers, distributors and suppliers.  In addition, in recent years 
the stock market in general, and the market for shares of equity securities 
of many high technology companies in particular, has experienced extreme 
price fluctuations which have often been unrelated to the operating 
performance of those companies.  Such fluctuations may adversely affect the 
market price of the Company's common stock.

    The Company's quarterly operating results have varied significantly in 
the past, and the Company expects that its operating results are likely to 
vary significantly from time to time in the future.  Such variations result 
from, among other factors, the following:  the size and timing of significant 
orders and their fulfillment; demand for the Company's products; the number, 
timing and significance of product enhancements and new product announcements 
by the Company and its competitors; ability of the Company to attract and 
retain key employees, especially in the sales organization; seasonality; 
changes in pricing policies by the Company or its competitors; realignments 
of the Company's organizational structure; changes in the level of the 
Company's operating expenses; changes in the Company's sales incentive plans; 
budgeting cycles of the Company's customers; customer order deferrals in 
anticipation of enhancements or new products offered by the Company or its 
competitors; product life cycles; product defects and other product quality 
problems; the results of international expansion; currency fluctuations; and 
general domestic and international economic and political conditions.  
Because a significant portion of the Company's revenues have been, and the 
Company believes will continue to be, derived from orders ranging in size 
from several hundred thousand dollars to approximately $1 million, the timing 
of such orders and their fulfillment has caused and is expected to continue 
to cause material fluctuations in the Company's operating results, 
particularly on a quarterly basis.  In addition, the Company has recently 
expanded its North American direct sales force and the rate at which new 
sales people become productive could also cause material fluctuations in the 
Company's quarterly operating results.

    Because of the foregoing factors, quarterly revenues and operating 
results are difficult to forecast.  Revenues are also difficult to forecast 
because the market for client/server application development software is 
rapidly evolving, and the Company's sales cycle, from initial evaluation to 
purchase and the provision of maintenance services, is lengthy and varies 
substantially from customer to customer.  In particular, with the fiscal 1997 
release of Unify VISION 3.0 and VISION/Web the Company has experienced new 
opportunities to compete for larger, enterprise-level sales transactions.  
These transactions have even longer sales cycles than the Company has 
experienced in the past. Because the Company normally ships products within a 
short time after it receives an order, it typically does not have any 
material backlog.  As a result, to achieve its 

                                          10
<PAGE>

                                  UNIFY CORPORATION
                                           

quarterly revenue objectives, the Company is dependent upon obtaining orders 
in any given quarter for shipment in that quarter.  Furthermore, because many 
customers place orders toward the end of a fiscal quarter, the Company 
generally recognizes a substantial portion of its revenues at the end of a 
quarter.  As the Company's expense levels are based in significant part on 
the Company's expectations as to future revenues and are therefore relatively 
fixed in the short term, if revenue levels fall below expectations operating 
results are likely to be disproportionately adversely affected.

    The Company also expects that its operating results will be affected by 
seasonal trends.  The Company believes that it is likely it will experience 
relatively higher revenues in fiscal quarters ending April 30 and relatively 
lower revenues in fiscal quarters ending July 31 as a result of efforts by 
its direct sales force to meet fiscal year-end sales quotas.  The Company 
also anticipates that it may experience relatively weaker demand in fiscal 
quarters ending July 31 and October 31 as a result of reduced business 
activity in Europe during the summer months.

    In particular, because of the foregoing factors and because of longer 
sales cycles associated with Unify VISION 3.0 and VISION/Web, the Company 
expects that it will incur an operating loss for the quarter ending October 
31, 1997.  The Company has incurred net losses in five of the last eight 
fiscal quarters and in each of the last five fiscal years.  There can be no 
assurance regarding when or if the Company will return to profitability.

LIQUIDITY AND CAPITAL RESOURCES

    At July 31, 1997, the Company had cash, cash equivalents and short-term 
investments of $12.0 million, compared to $16.6 million at April 30, 1997. 
Working capital decreased to $6.0 million at July 31, 1997 from $7.6 million 
at April 30, 1997.

    The Company's operating activities used cash of $2.6 million during the 
three months ended July 31, 1997, primarily for operating losses.  Investing 
activities during the period generated cash of $0.4 million, consisting 
principally of net sales of short term investments of $0.5 million offset by 
equipment purchases of $0.2 million.  Cash used in financing activities 
during the period was $1.9 million, representing primarily the retirement of 
the $2.2 million stockholder line of credit which expired in July 1997.

    The Company believes that current cash, cash equivalents and short-term 
investments will be sufficient to meet its cash requirements during the next 
12 months.  Thereafter, depending on its operating results, the Company may 
require additional equity or debt financing to meet its working capital or 
capital equipment requirements.  There can be no assurance that additional 
financing will be available when required or, if available, that it will be 
on terms satisfactory to the Company.

                                          11
<PAGE>
                                           
PART II. OTHER INFORMATION


ITEM 5.  OTHER INFORMATION

         Carla Schneiderman, Vice President, Worldwide Marketing and Business
         Development, resigned her position effective August 31, 1997.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              Exhibit 11.1   Statement of Computation of Net Income (Loss) 
                             Per Share 

              Exhibit 27     Financial Data Schedule


         (b)  Reports on Form 8-K
                                                 
              The Company filed no reports on Form 8-K during the quarter 
              ended July 31, 1997.


                                          12
<PAGE>

                                   UNIFY CORPORATION
                                           
                                       SIGNATURE
                                           

Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.

Date:   September 3, 1997             Unify Corporation
                                      (REGISTRANT)



         
                                      By:

                                      Susan Salvesen
                                      ------------------------------------------
                                      Susan Salvesen
                                      Vice President, Finance and Administration
                                      and Chief Financial Officer  (Principal
                                      Financial and Accounting Officer)


                                          13